KUALA LUMPUR: Foreign net buying of Malaysian bonds surged to RM10.2 billion in April 2025 from RM3.2 billion in March, driven by strong demand for Malaysian Government Securities (MGS) and Government Investment Issues (GII), said RAM Rating Services Bhd (RAM Ratings).
In a statement today, RAM Ratings said MGS and GII attracted RM9.7 billion of inflows in April, up from RM3.0 billion in the preceding month.
Additionally, the increase in April was supported by Malaysian Treasury Bills (MTB) and Malaysian Islamic Treasury Bills (MITB), which recorded RM480 million in inflows -- a reversal of the RM252 million outflows in the previous month.
"The surge in April marks the second consecutive month of net inflows, despite "Liberation Day” tariffs announced on April 2, 2025,” it said.
According to RAM Ratings, the Liberation Day tariffs sparked a sharp increase in market turmoil, with the volatility index published by the Chicago Board Options Exchange - often called the "Fear Index” - rising to a high not seen since the start of the COVID-19 pandemic.
"Heightened risk aversion contributed to a weakening of the ringgit against the US dollar in the first week of April, as the local currency swiftly depreciated to 4.50 against the greenback as at April 9 from 4.43 as of end-March.
"The 10-year US Treasury (UST) yield soared to a high 4.48 per cent as at April 11 from 4.23 per cent as of end-March. Market jitters, however, soon subsided amid signs of easing US-China trade tensions. The ringgit rose to 4.32 against the US dollar as of end-April while the 10-year UST yield retreated to 4.17 per cent,” it added.
RAM Ratings said that adding to yield volatility, Moody’s Ratings downgraded the US sovereign credit rating to Aa1 from Aaa on May 16, citing structural fiscal concerns and the unsustainable trajectory of US debt -- this contributed to renewed weakness in US treasuries, triggering another round of repricing of US government debt.
"The 10-year UST yield jumped to 4.46 per cent as at May 19 from 4.17 per cent as of end-April, as markets digest the downgrade alongside concerns of reduced foreign appetite for US debt.
"The selloff pressure was relatively contained within the US as MGS yields largely trended sideways, with the benchmark 10-year MGS yield sitting at 3.64 per cent as at May 19 from 3.68 per cent as of end-April,” it said. - Bernama
